BONDED INDEBTEDNESS. The obligations of the State which are ahead of us, and which will have to be met under the terms of the law relative to the settlement of the State debt as per act of 1883, and, as appears in greater detail below, at the time the work of funding commenced in July, 1883, according to closest calculation, amounted to $28,786,066.39, including principal and interest. Of this amount the "State Debt Proper" bonds (interest on which cannot be accurately ascertained, for the reason that the bonds have varying numbers of coupons upon them, and which cannot be ascertained until they are presented for funding) amount to $2,135,150; educational, charitable and other bonds, that along with "State Debt Proper" bonds are by the act of 1883, six per cent. bearing bonds) amounting to $648,000 (on which last named bonds six per cent. interest has been paid currently up to date, shows that there is $2,783,150 on which the State will have to pay six per cent. interest, not estimating unascertained interest as aforesaid. Deduct, then, this latter amount ($2,783,150) from the total bonded indebtedness ($28,786,066.39), leaves $26,002,916 39, and taking fifty per cent. thereof (principal and interest), it will be seen that there will yet remain, $13,001,458.19, upon which the State will have to pay three per cent. interest. This makes the total bonded indebtedness of the State (all bonds included) under operation of act of 1883, about $15,784,608.19. THE FUNDING BOARD. The Funding Board began its tedious and laborious operations in July, 1883. Since that time, as will fully appear below, the total bonds funded, amounted to $8,090,215.39, leaving unfunded to date of report (January 1, 1885), $20,695,851.00. Based on this calculation it will be seen that, upon the theory that all of the bonds are presented for funding, the State in the end will have to pay $492,399 interest annually on the whole amount of the State's indebtedness, and in proportion theeeto as the bonds are annually funded, unless some of the outstanding obligations should be otherwise disposed of. For those already funded the State has to pay annually $154,140 interest. I beg, however, to submit as explicitly as I can the amount of original indebtedness absorbed by funding the old bonds into New Settlement Bonds, together with the amount of the latter issued in lieu thereof. The following statement will show the amount of bonds funded under the act of March 15, 1883: "STATE DEBT PROPER"-SIX PER CENT BONDS. 549 Settlement Bonds, bearing six per cent. interest, $1000 each 331 Settlement Bonds, bearing six per cent. interest, $100 each.... Certificates........ Total net amount issued six per cent. Bonds........... FIVE PER CENT. BONDS. $127,000 238,000 26,000 .. 79,000 16,000 1,000 1,000 29,000 .$517,000 .$250,780 00 767,780 00 184,266 20 .$583,513 80 3,466 47 $586,980 27 .$549,000 00 33,100 00 4,880 27 $586,980 27 White "A" and White "AA" renewed, 258 Bonds, $1000 each...........$258,000 00 White, no letter, 11 Bonds, $1000 each............ Total, 269 Bonds, $1000 each......................... Interest on the same funded........ 11,000 00 $269,000 00 $127,834 47 For which have been issued 310 Bonds, bearing five per cent. interest, $1000 each....... 71 Bonds, bearing five per cent. interest, $100 each........ Certificates...................... ...... Total net amount issued five per cent. Bonds.......... RAILROAD BONDS-THREE PER CENT. $310,000 00 7,100 00 814 98 $317,914 98 Amount deducted the same having been funded under 60–6 Act)...... 1,627,638 83 Net amount...... Amount" Certificates" taken up... Total net amount three per cent. funded............ 3,448,668 67 6,421 97 .$3,455,090 64 [Many of these bonds were funded under the 60-6 Act of 1882, by which they were reduced forty cents on the dollar, leaving sixty cents on the dollar of original amount to be funded under Act of 1883.] For which we have issued 3,347 Bonds, bearing three per cent. interest, $1000 each.......... 983 Bonds, bearing three per cent. interest, $100 each Certificates..... ............ Total three per cent. Bonds issued ...... ...$3,347,000 00 98,300 00 9,790 64 .$3,455;090 64 New Settlement From the above statement it will be seen that the Debt on Bonds" upon which the State is now paying interest-deducting difference between Certificates taken up and Certificates issued—is as follows: From the above it will also be seen that there has been taken up in six per There has been retired in five per cent. Bonds and Certificates...... Total......... $317,914 98 79,478 77 $397,393 75 There has been retired in three per cent. Bonds and Certificates........$3,455,090 61 Add fifty per cent. deducted, one half of original bonds........... 3,455,090 64 Total Amount of Railroad Bonds retired by 50-3 Act...............$6,910,181 28 Add six per cent. Bonds retired.................. ................. 1......... Which gives amount of original debt and interest retired.......... 782,640 36 397,393 75 .$8,090,215 89 Another feature of the financial embarrassment of our State has grown out of the "Torbett Issue," or notes of the old State Bank, issued principally during the war, which we are constrained under decision of the Supreme Court of the United States to receive for taxes, and in doing so, under the direction of the last Legislature, have to take up in the shape of taxes $200,000 annually. There is pending in our State courts, and will probably be decided this winter, suits involving the State's liability for more than $300,000.00 of this "Torbett Issue;" $631,000.00 has already been eximined and substituted by Treasury Certificates, and an unknown quantity not yet brought in. I am encouraged, however, very much. in the belief that these financial impediments which have so long been an embarrassment to the State, are being gradually and successfully removed. That the State is righting herself, after the severe storm through which she has partially passed, is evidenced by the fact that within the limited time that the funding has been going on we have re tired more than eight millions of dollars of our bonded indebtedness, without any efforts or appliances whatever, other than the publication of the law itself, with the preamble thereto, giving a history of its creation, the circumstances of its growth, and the manner in which it has been handled. No like measure, as far as I am able to learn, in any State, has been more successful in its operations than our funding act of 1883, only where there has been a positive limit to the time in which the same should be funded, as in the act of 1882. Especially is this so when we consider that, as it is understood, more than one-third of our bonded indebtedness is involved in the suit, still pending in the Supreme Court of the United States, between certain bondholders and the railroads of our State, none of which, as is understood, has been presented to the Funding Board, or will be until the suit is decided. It is also a gratifying fact that the proportion paid, and to be paid, on our entire indebtedness, under the operation of this act of 1883, a large amount of which grew up immediately after the war, when the governing laws as well as the business relations were in an unsettled condition, is equal and in most instances greater than that of any of our sister Southern States that have passed through the same trying ordeal. It is also quite as gratifying that our bonds, which, before the Funding Board commenced its operations under act of March, 1833, when saleable at all, were disposed of at most ruinous rates, and that now, notwithstanding the recent severe monetary pressure, are sought after by purchasers in the money markets of the world at a price advanced to almost double that for which they sold eighteen months ago-our six per cents. being sold now as high as ninety-seven cents on the dollar or nearly at par, and the three per cents. which then sold at from thirty-five and forty cents, now sell at from fifty-five to sixty cents on the dollar. It is respectfully requested that you will appoint suitable committees to examine, critically, the work of the Funding Board, and see that it has been done in conformity with the statute, and especially that all of the bonds have been properly substituted by the new or "Settlement Bonds," and all the old bonds and coupons thereunto attached have been properly cancelled. It is also requested that a suitable committee be appointed to examine and count the old State Bank issue, both the old and Torbett issue, to ascertain and report to your body if all the money taken in by the board of examiners and passed upon by experts has been properly cancelled. In this connection I desire to State that an act passed by the Thirty-seventh General Assembly, authorizing the Governor to make arrangements to guard the interests of the State in a suit then pending in the Federal Court at Nashville, wherein the United States Government had sued the McMinnville & Manchester Railroad Company for $57,000. The State having sold said McMinnville road, its rails, engines, etc., to the Memphis & Charleston Railroad Company, the purchasers required that the State should hold them harmless as to the result of said suit, and to do so there was subsequently deposited in the Fourth National Bank, 127 bonds of the State for $1,000 each as collateral. The said suit was not terminated until within the last few months, resulting in a judgment against said McMinnville & Manchester Railroad Company, including cost of $10,336.00. The decree of the |